David Hone

Climate Change Advisor for Shell

Hello and welcome to my blog. There's lots said about why climate change now confronts us, and what it means, but the real issue is what to do about it. Plenty is said about that too, but there's not enough discussion on the practical aspects of implementation. Focusing on energy, that's what my blog sets out to achieve.

Learning from history

As society looks at the challenge of rapidly scaling up various energy technologies with a view to displacing existing CO2 emitting infrastructure, the question of policy keeps coming up. Should it be cap-and-trade, or a carbon tax, or direct regulation or perhaps, as some seem to be hinting at, just wishful thinking.

There are some good examples of rapid scale-up in history, one of which I recently wrote about in my posting Liberty Turbines. Unfortunately all of them seem to happen in the context of conflict on a global or near global scale where the need for urgent action is extreme. In such cases policy becomes a severe version of command and control with governments stepping in and directing the industrial base to produce a particular range of goods against an almost infinite order book and a similarly inflated spending programme. But it works!

Thanks to colleagues in our scenarios team, I have come across another such example (The Chemical Engineer, April 2010). Over the period 1941 to 1945 the production of aviation gasoline in the USA grew by 6000% (60x) to some 9 billion gallons p.a. thanks mainly to the development of the Fluidized Bed Catalytic Cracker (FCC), a processing unit found in most complex refineries today. Although still in pilot stage in 1941 (a 100 b/d unit at Standard Oil’s Baton Rouge Refinery built in 1940), construction of the first full-scale commercial plant (13,000 b/d) was started, followed by further improved units in 1942 and 1943. Soaring demand for high-octane aviation fuel and synthetic butyl rubber (cat cracking yields butadiene) to fuel the war in Europe meant that by 1945, no less than 34 more FCC units had been built. In fact, the demand for gasoline was so great that the construction of 32 FCC plants was underway before the first commercial plant was in operation.

The policy framework to do all this was a pretty simple one. In response to the escalating conflicts in Europe and the Pacific the President created the War Production Board (WPB) by Executive Order 9024 on January 16, 1942, replacing the Supply Priorities and Allocation Board as well as the Office of Production Management. WPB was granted supreme authority to direct procurement of materials and industrial production programs. The national WPB constituted the chair (Donald M. Nelson, 1942 44; Julius A. Krug, 1944 45) appointed by the president, the secretaries of war, navy, and agriculture, the federal loan administrator, lieutenant general in charge of war department production, administrator of the office of price administration, chair of the board of economic warfare, and special assistant to the president who supervised the defense aid program. The board created advisory, policy-making, and progress-reporting divisions.

Looking at current efforts, there are some similar examples, but not on the scale described above. The United States has increased its production of bio-diesel from 2 million gallons in 2000 to an estimated 250 million gallons in 2006. While 250 million gallons is smaller than the E.U. production (Germany alone estimates its 2006 production at about 690 million gallons), it represents significant growth. The trend has recently accelerated, and production grew at a pace of 113 million gallons per year between 2004 and 2006. According to the National Biodiesel Board, there were 105 plants in operation in early 2007 with an annual production capacity of 864 million gallons. Further capacity is under construction against expected domestic demand in 2011 of some 800 million gallons (EPA). The rapid expansion of biodiesel production observed between 2000 and 2006 was triggered by a 1998 amendment to the 1992 Energy Policy Act and cash support from the USDA Commodity Credit Corporation’s (CCC) Bioenergy Program. Further support was created through the American Jobs Creation Act (the Jobs Act) of 2004 and the Energy Policy Act of 2005.

In this case a much more subtle policy shift has created the impetus for change, although in comparison to total US distillate production of some 60 billion gallons per annum this is still very small and much smaller than the 1945 production of aviation gasoline in the USA – some 8-10 billion gallons. But it does show that rapid acceleration and deployment of new technology is possible, given policy instruments that are clear, focused and long term in nature. It also shows that even very rapid change still takes years given the scale of our energy system.

Finally, as something of an aside to all this, I came across the following Shell reference in trying to find some more information on this:

Before World War II, Major Jimmie Doolittle realized that if the United States got involved in the war in Europe, it would require large amounts of aviation fuel with high octane. Doolittle was already famous in the aviation community as a racing pilot and for his support of advanced research and development (and would later earn even wider fame as head of the 1942 B-25 bombing raid on Tokyo). In the 1930s, he headed the aviation fuels section of the Shell Oil Company. Fuel is rated according to its level of octane. High amounts of octane allow a powerful piston engine to burn its fuel efficiently, a quality called “anti-knock” because the engine does not misfire, or “knock.” At that time, high-octane aviation gas was only a small percentage of the overall petroleum refined in the United States. Most gas had no more than an 87 octane rating. Doolittle pushed hard for the development of 100-octane fuel (commonly called Aviation Gasoline or AvGas) and convinced Shell to begin manufacturing it, to stockpile the chemicals necessary to make more, and to modify its refineries to make mass production of high-octane fuel possible. As a result, when the United States entered the war in late 1941, it had plenty of high-quality fuel for its engines, and its aircraft engines performed better than similarly sized engines in the German Luftwaffe’s airplanes. Engine designers were also encouraged by the existence of high-performance fuels to develop even higher-performance engines for aircraft.